Do Homeowners Insurance Policies Cover Nuclear Accidents?

The recent Japanese earthquake and ensuing tsunami may have had you checking your homeowners insurance policy to see if you’d be covered for those kinds of disasters. The answer in both cases is probably not. Standard homeowners insurance and renters insurance policies do not cover earthquakes or flood damage. You have to purchase those coverages separately. Okay, but what if you live near one of America’s 104 nuclear power plants? Would your homeowners insurance cover that or could you purchase nuclear insurance for homeowners? Here again, the answer is no on both counts. But the good news is you don’t have to.

Insurance companies exclude nuclear accidents from their covered perils. In fact, they are forbidden by law from offering it. They don’t sell it to property owners, nor do they insure nuclear power plants because the Price-Anderson Act places all liability for damages exceeding $10 billion for a nuclear accident on the federal government. The first $10 billion is in a fund maintained by America’s nuclear industry (which currently has a claim capacity in excess of $12.5, according to the US Nuclear Regulatory Commission’s website).

The Price-Anderson Act was enacted by Congress in 1957. Price-Anderson covers claims for damages arising from operation of a nuclear facility, storage or transport of nuclear fuel and waste and any incident involving theft or sabotage, according to USNRC’s website. Coverage includes reimbursements for personal injury, sickness, property damage and living expenses if you are under a mandatory order to evacuate.

Since its enactment, Price-Anderson has been revised and extended several times, adjusting liability limits and provisions for claims. In 1967, Congress introduced the concept of an “extraordinary nuclear occurrence.” This extended the definition of an accident to include substantial damage from radioactive contamination to people and property away from the actual plant site. Congress failed to renew the act in 2003, but under the Energy Policy Act of 2005, it was reinstated and extended through 2025, with its current liability limits. To date, about $200 million in claims and litigation costs have been paid out. The majority, $71 million, followed the 1979 accident at Three Mile Island in Pennsylvania.

All of this may or may not make you feel more secure if you happen to live within 100 miles of a nuclear reactor. The reality is, you’d do better worrying about the likelihood of a flood or earthquake. If you don’t have coverage for those eventualities, act soon. In the wake of the Japanese tragedy, premium prices for both are predicted to spike. You can get standard homeowners insurance online and shop for competitive quotes for earthquake insurance on this site. Flood insurance is sold through the National Flood Insurance Program, backed by the federal government. You can get flood insurance quotes on this site, too.